1. 7 chapter Business Essentials, 8 th Edition Ebert/Griffin Operations Management and Quality Instructor Lecture PowerPoints PowerPoint Presentation prepared by Carol Vollmer Pope Alverno College Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

2. After reading this chapter, you should be able to: 1.Explain the meaning of the term production or operations. 2.Describe the three kinds of utility that operations processes provide for adding customer value. 3.Explain how companies with different business strategies are best served by having different operations capabilities. 4.Identify the major factors that are considered in operations planning and in operations control. 7-2 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

3. After reading this chapter, you should be able to: 5.Discuss the information contained in four kinds of operations schedules—the master production schedule, detailed schedule, staff schedule, and project schedule. 6.Identify the activities and underlying objectives involved in total quality management. 7.Explain how a supply chain strategy differs from traditional strategies for coordinating operations among firms. L E A R N I N G O B J E C T I V E S (cont.) 7-3 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

4. What’s in It for Me? By understanding this chapter’s methods for managing operations and improving quality, you can benefit in two ways: 1.As an employee, you’ll have a clearer picture of who your customers are and what they want and how your job depends on the services they receive from you 2.You’ll better understand how companies around you— even successful firms—have to change production methods whenever they adopt new business goals to remain competitive 7-4 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

5. What Does Operations Mean Today? Operations (Production) – All the activities involved in making products (goods and services) for customers Service Operations (Service Production) – Provide intangible and tangible service products Goods Operations (Goods Production) – Produce tangible products Operations managers create utility for customers through production, inventory, and quality control. 7-5 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

6. Creating Value Through Operations Utility – The ability of a product to satisfy a want or need Form utility Time utility Place utility Operations (Production) Management – Systematic direction and control of processes that transform resources into finished services and goods that create value for and provide benefits to customers 7-6 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

7. Differences Between Service and Goods Manufacturing Operations Goods are produced, services are performed Service operations: 1.Involve interacting with consumers 2.Are sometimes intangible and unstorable 3.Involve a customer’s presence in the process 4.Involve certain service quality considerations 7-7 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

8. Operations Processes Operations Process – Methods and technologies used to produce a good or service Goods Production Processes – Make-to-order or make-to-stock processes Service Production Processes – Extent of Customer Contact Low-contact systems: low customer involvement High-contact systems: high customer involvement 7-8 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

9. Business Strategy as the Driver of Operations Companies design their operations based on business strategy. 7-9 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

10. TABLE 7.1 Business Strategies That Win Customers for Four Companies 7-10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

11. Operations Planning Capacity Planning –Determining the amount of a product that a company can produce under normal conditions Location Planning –Determining where production will happen based on costs and flexibility 7-11 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

12. Operations Planning (cont.) Layout Planning – Planning for the layout of machinery, equipment, and supplies – Determines whether a company can respond to demand for more and different products or it finds itself unable to match competitors’ speed and convenience Process layouts Product layouts 7-12 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

13. FIGURE 7.1 Operations Planning and Control 7-13 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

14. Quality Planning What Is Quality? – The combination of “characteristics of a product or service that bear on its ability to satisfy stated or implied needs” (American Society for Quality) – Begins when products are designed: goals are set for performance and consistency – Includes deciding what constitutes a high-quality product and determining how to measure these quality characteristics 7-14 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

15. Methods Planning Managers identify each production step and methods for performing it. They reduce waste and inefficiency through methods improvement and improving process flows. – A detailed description, often a process flowchart, helps managers organize and record information. They attempt to improve customer service. 7-15 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

16. Operations Scheduling –Times when specific production activities will occur Kinds of Planning Schedules –Master schedule: Shows which products will be produced, and when –Detailed schedule: Shows day-to-day activities –Staff schedules: Show who and how many employees will be working, and when –Project schedules: Coordinate completion of large- scale projects 7-16 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

17. FIGURE 7.3 Example Partial Master Production Schedule (Tons of Each Product to be Produced) 7-17 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

18. Project Scheduling Gantt Chart – Breaks down projects into steps to be performed – Specifies the time required to complete each step – A Project Manager uses the Gantt chart to: List all activities to be performed Estimate the time required for each step Record the progress on the chart Check the progress against the time scale on the report 7-18 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

19. Figure 7.4 Gantt Chart 7-19 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

20. Operations Control –Requires managers to monitor performance by comparing results with detailed plans and schedules. –Follow-up: Checking to ensure that production decisions are being implemented; critical, ongoing facet of operations. 7-20 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

21. Materials Management –The process by which managers plan, organize, and control the flow of materials from sources of supply through distribution of finished goods Materials Management Activities –Supplier selection –Purchasing –Transportation –Warehousing –Inventory control 7-21 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

22. Lean Production Systems: Just-in-Time Operations Lean Production Systems Goals – Smooth production flows avoid inefficiencies – Elimination of unnecessary inventories – Continuous improvement in production processes Just-in-Time (JIT) Production – Bringing together all needed materials only when they are required, creating fast and efficient responses to customer orders 7-22 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

23. Benefits of Just-in-Time Production 1.Reduces the number of goods in process (goods not yet finished) 2.Minimizes inventory costs 3.Reduces inventory storage space requirements 4.Replaces stop-and-go production 5.Disruptions are visible and get resolved quickly 6.Continuous improvement of the process 7-23 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

24. Quality Control – Taking action to ensure that operations produces products that meet specific quality standards – Requires establishment of specific standards and measurements 7-24 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

25. Quality Improvement and Total Quality Management Quality Improvement – Building quality into products and services rather than trying to control quality by inspection Total Quality Management (TQM) – All of the activities necessary for getting high-quality goods and services into the marketplace Quality Ownership – Quality belongs to each person who creates it while performing a job and it requires a focus on quality by all parts of an organization 7-25 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

26. Total Quality Management Always Delivering High Quality – Planning for quality – Organizing for quality – Directing for quality – Controlling for quality 7-26 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

27. Tools for Total Quality Management Competitive Product Analysis – Analyzing competitors’ products to identify improvements Value-Added Analysis – Eliminating wasteful and unnecessary activities Quality Improvement Teams – Adopting quality circles Getting Closer to the Customer – Identifying internal and external customers ISO 9000 and ISO 14000 – Ensuring certification of quality management in processes Business Process Reengineering – Starting over from scratch to improve processes 7-27 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

28. Adding Value Through Supply Chains Supply Chain (or Value Chain) – The flow of information, materials, and services that starts with raw-materials suppliers and continues adding value through other stages in the network of firms until the product reaches the end customer 7-28 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

29. FIGURE 7.5 Supply Chain for Baked Goods 7-29 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

30. The Supply Chain Strategy Supply Chain Management (SCM) – Working with the supply chain to improve overall flow by companies working together Supply Chain Reengineering – Improving the process for better results: Lower costs, speedier service, and coordinated flows of information and material Outsourcing and Global Supply Chains – Paying suppliers and distributors to perform certain business processes or to provide needed materials or services 7-30 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

31. Key Terms assembly line business process reengineering capacity competitive product analysis consistency (in quality) detailed schedule follow-up Gantt chart goods operations (goods production) high-contact system inventory control ISO 14000 ISO 9000 just-in-time (JIT) production lean production system low-contact system make-to-order operations make-to-stock operations master production schedule (MPS) materials management operations (production) operations (production) management 7-31 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

32. Key Terms (cont.) operations (production) manager operations capability operations control operations process performance (in quality) process layout product layout purchasing quality quality control quality improvement team quality ownership service operations (service production) staff schedule supplier selection supply chain (value chain) supply chain management (SCM) total quality management (TQM) transportation utility value-added analysis warehousing 7-32 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

33. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. 337-33 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall